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South Asia Investor Review is focused on reporting, analyzing and discussing the economy and the financial markets of countries in South Asia, including Pakistan, Bangladesh and Sri Lanka. For investors looking to invest in emerging markets beyond BRIC countries (Brazil, Russia, India and China), this blog is designed to help international investors looking to learn about investing in South Asia with focus on Pakistan. Riaz has another blog called Haq's Musings at http://www.riazhaq.com

2018 Year-end Review of Science and Technology in Pakistan

Pakistan saw its technology exports grow by double digits to surge past $1 billion mark in 2018. Nature magazine reported the country ranked first in the world in research output growth in year 2018. Pakistan mobile broadband subscriptions grew by 1-2 million a month to pass 60 million. Google's Singapore-based Asia business lead Lars Anthonisen wrote that "Pakistan is quickly becoming a digital-first country". Chinese e-commerce giant Alibaba and its digital payments platform Alipay entered Pakistan market by acquiring Daraz.pk and Telenor EasyPaisa. Dr. Ata ur Rahman Khan, former chairman of higher education commission, asserted in an op ed that "Pakistan churns out about 22,000 computer-science graduates each year". Pakistan set an ambitious goal for its first human space flight in 2022. It was an exciting year for science and technology in the South Asian nation of over 200 million people.

Pakistan Technology Exports:

Pakistan's information technology exports have bucked the nation's declining exports trend with double digit growth to reach $1,065 million in fiscal year 2018, according to the State Bank of Pakistan. It is generally believed that Pakistan's central bank underestimates technology exports. Some have argued that the actual IT exports were closer to $5 billion in fiscal 2018. Some of the differences can be attributed to the fact that the State Bank IT exports data does not include various non-IT sectors such as financial services, automobiles, and health care.

Pakistan IT exports surged 13.4% to $1.06 billion in fiscal year 2018 from $939 million in fiscal year 2017. The growth was even more robust in the prior year with IT exports rising 19.1% from $789 million in fiscal 2016 to reach $939 million in fiscal year 2017.

Source: State Bank of Pakistan

About $320 million of IT exports revenue in fiscal 2018 came from software exports while the rest was made up of services such as consulting, telecom and call centers.

Scientific Research Output:

Pakistan is one of the world's top two countries where the research output rose the fastest in 2018, according to Nature Magazine. The publication reports that the "global production of scientific papers hit an all-time high this year...with emerging economies rising fastest".

Pakistan ranked first or second depending on whether one accepts the text or the graphic (above) published by Nature. The text says Egypt had 21% growth while the graph shows Pakistan with 21% growth. Here's an excerpt of the text: "Emerging economies showed some of the largest increases in research output in 2018, according to estimates from the publishing-services company Clarivate Analytics. Egypt and Pakistan topped the list in percentage terms, with rises of 21% and 15.9%, respectively. ...China’s publications rose by about 15%, and India, Brazil, Mexico and Iran all saw their output grow by more than 8% compared with 2017".

Pakistan's quality-adjusted scientific output (Weighted Functional Count) as reported in Nature Index has doubled from 18.03 in 2013 to 37.28 in 2017. Pakistan's global ranking has improved from 53 in 2013 to 40 in 2017. In the same period, India's WFC has increased from 850.97 in 2013 to 935.44 in 2017. India's global ranking has improved from 13 in 2013 to 11 in 2017.

Mobile broadband subscriptions (3G and 4G) grew at a rate of 1-2 million per month to pass 60 million in 2018, according to data from Pakistan Telecommunication Authority (PTA). Rising digital infrastructure is enabling a whole range of applications from e-commerce to digital payments and greater financial inclusion. It prompted Google's Singapore-based Asia business lead to write that "Pakistan is quickly becoming a digital-first country"

Alipay, a subsidiary of Hangzhou-based Ant Financial, has received approval by the Competition Commission of Pakistan (CCP) to acquire a 45 percent stake in Pakistan's Telenor Microfinance Bank for $184 million. Alipay's entry is expected to expedite widespread adoption of digital payments in the country. Several domestic mobile payment services offered by telecom operators are currently operating in Pakistan. The lack of international reach has kept the penetration rate of the payment portals relatively low. Entry of Alipay, the world's largest mobile payment platform, will intensify digital payments competition, improve the quality of service, energize the industry and enhance financial inclusion in a country where less than 20% of the population has bank accounts.

E-Commerce Growth:

At the World Economic Forum in 2017, Ebay’s chief executive Devin Wenig highlighted Pakistan as one of the fastest growing e-commerce markets in the world. It might have prompted Alibaba to acquire Daraz.pk, Pakistan’s largest e-commerce platform, in May 2018.

Online sales in Pakistan's $152 billion retail market are doubling every year, according to Adam Dawood of Yayvo online portal. The country's retail market is the fastest growing in the world, according to Euromonitor. Expanding middle class, particularly millennials with rising disposable incomes, is demanding branded and packaged consumer goods ranging from personal and baby care items to food and beverage products. Strong demand for fast moving consumer goods is drawing large new investments of hundreds of millions of dollars. Rapid growth in sales of consumer products and services is driving other sectors, including retail, e-commerce, paper and packaging, advertising, media, sports and entertainment. Potential downsides of soaring consumption include increased amount of solid waste and decline in domestic savings and investment rates.

Summary:

Pakistan saw its technology exports grow by double digits to surge pass $1 billion mark in 2018. Nature magazine reported the country ranked first in the world in research output growth in year 2018. Pakistan mobile broadband subscriptions grew by 1-2 million a month to pass 60 million. Google's Singapore-based Asia business lead wrote that "Pakistan is quickly becoming a digital-first country". Chinese e-commerce giant Alibaba and its digital payments platform Alipay entered Pakistan market by acquiring Daraz.pk and Telenor EasyPaisa. Dr. Ata ur Rahman Khan, former chairman of higher education commission, asserted in an op ed that "Pakistan churns out about 22,000 computer-science graduates each year". Pakistan set an ambitious goal for its first human space flight in 2022. It was an exciting year for science and technology in the South Asian nation of over 200 million people.

Pakistan Council of Renewable Energy Technologies (PCRET), which is working under Ministry of Science and Technology, has installed 562 micro-hydel power plants with total capacity of 9.7 MW during the last five years, electrifying more than 80,000 houses.

An official source from Ministry of Science and Technology told APP that the ministry and its research and development organizations are mandated to develop technologies for socio-economic development of the country.

Technologies have been developed in different sectors like water, renewable energy, electronics, health, Small and Medium sized Enterprises (SMEs), industry, agriculture etc to directly and indirectly benefit a common man.

Listing different technologies developed during the last five years, the official source informed that PCRET has installed 155 small wind turbines in Sindh and Balochistan electrifying 1560 houses and installed 4016 biogas plants.

The council has established 20 KW hybrid system including solar, MHP and wind in collaboration with China for research and training purposes.

PCRET has also designed and stimulated Wind Turbine and solar products including Solar Cooker, Solar Dryer, Solar Water Heater and Solar Desalination.

During the last five years, Pakistan Council of Scientific and Industrial Research (PCSIR) which is also an important department of the ministry has developed Coal Water Slurry Fuel and Reinforced Derived Fuel and solar driven one inch and two inches water pumps. PCSIR has also designed the Solar Powered Reverse Osmosis Plant, the source said.

While National Institute of Electronics (NIE) has developed LED lights, Solar Charge Controller, Automatic Voltage Stabilizer and cascaded multilevel inverter based transformer-less Unified Power Flow Controller, it added.

According to the latest progress report on CPEC issued by the Chinese Embassy in Pakistan, 20 more projects were in pipeline under CPEC, which was the largest and most comprehensive project under the Belt and Road Initiative (BRI), besides being of great political, economic and social significance to China and Pakistan.

For implementation of CPEC, the two sides have set up a ministerial-level Joint Cooperation Committee on CPEC Long Term Planning (JCC) and seven joint working groups on planning, energy, transportation infrastructure, Gwadar Port, industrial cooperation, social economic development and international cooperation. They also decided to establish Joint Working Groups on social economic development and international cooperation.

Out of 15 energy projects planned as priority with a total generation capacity of 11,110MW, seven have been completed and in operation, while another six are under construction with a total capacity of 6,910 MW.

At present, Zonergy 300MW Solar Park, 50MW Dawood Wind Farm, Jhimpir UEP wind power project, Sachal 50MW Wind Farm, Sahiwal 2×660MW Coal-fired Power Plant, Port Qasim 2×660MW Coal-fired Power Plant and Three Gorges Second and Third Wind Power Projects have been completed. These projects have added 3240 MW to the Pakistani national grid, amounting to more than 11% of the total installed capacity of 29,000 MW in the country.

CPEC energy projects are providing affordable energy to Pakistani consumers in a diversified way. The tariff of power plants has been sharply decreased from Rs 16-18 to around Rs 8 per unit. With the introduction of CPEC energy projects, Pakistan also reduced its heavy dependence on gas and LNG power plants, which account for 50% of total installed capacity. The CPEC energy projects are foreign direct investment and are executed in accordance with BO(O)T mode. Any debt arising from the CPEC energy projects would be borne by the Chinese investors instead of the Pakistani government.

Regarding infrastructure projects, the report said currently, three projects including KKH Phase-II (Havelian-Thakot section), Karachi-Lahore Motorway (Sukkur-Multan section) and Lahore Orange Line are under construction. The information highway for laying of an optical fiber cable (OFC) from Rawapindi to Khunjrab is in operation. These ongoing projects are funded by preferential loans from the Chinese government at around 2% interest rate with a total amount of 5.874 billion USD. The up-gradation of ML1 railway and the KCR are under discussion.

About Gwadar Port, it said up to now China Overseas Ports Holding Company (COPHC) has invested $ 250 million in the port renovation. Five new quay cranes, a 100,000 M2 storage yard, a seawater desalination plant with capacity of 220,000-gallon pure water/day, two sets of sewage disposal systems and cargo handling equipment have been installed and 80,000 M2 green space has been added to the port area. 400,000 tons of cargoes have been handled by Gwadar Port in 2017.

The Gwadar Free Zone is located in the northern part of Gwadar. The planned development period is from 2015 to 2030, and is divided into four phases. The 923-hectare Free Zone includes an initial area (25 hectares) and the northern area (898 hectares).

Around 30 companies have invested in the Free Zone, with direct investment of about $474 million. With the construction of the free zone, the city of Gwadar will become a commercial hub of the region in the near future. The construction of Gwadar East Bay Expressway project was started in November 2017 and would be completed in 36 months with the designed speed of 100 kilometers per hour

.------------Financing Run Down of 22 CPEC Projects2018/12/29https://pk.chineseembassy.org/eng/zbgx/t1625940.htm

86% of all #patents awarded in #India in 2017 went to #foreignersThe number of patents granted by India jumped 50 per cent to 12,387 in 2017 as compared to 8,248 granted in the previous year, according to data released by the UN's World Intellectual Property Organisation (WIPO).

India granted 86 per cent (10,675) of the total patents to foreigners as compared to 14 per cent (1,712) awarded to entities and individuals based in India.

#Indians received 1700 patents awarded in #India which is about 8x those awarded to #Pakistanis in #Pakistan

"Filing abroad reflects the globalisation of intellectual property (IP) protection and a desire to commercialise technology in foreign markets. The costs of filing abroad can be substantial, so the patents for which applicants seek international protection are likely to confer higher values," quoted the report released by WIPO in Geneva on Monday. Among other factors, technological specialisation, proximity and market size influence cross-border applications, the report highlighted.

2018 has ended, and the Pakistani entrepreneurial ecosystem has yet to witness a unicorn. Yet, the number of investments raised by Pakistani startups in 2018 outdo the previous year.

Pakistan is now gaining traction as one of the emerging ecosystems to currently invest in the Asian region. While local investors continue to struggle to build their investment portfolio, foreign investors are taking the lead to venture into the Pakistani market.

This year, over 40 startups at different stages have closed investment deals out of which 54 percent were women-led businesses. While some of the major deals of the year were raised by a local extension of an international group, it is worth noting that Pakistan is attracting capital as a potential business location.

With the establishment of three venture funds involving international partners such as Sarmayacaar, SparkLabs, and i2i Ventures, 2019 is expected to fuel the local startups with more capital. Meanwhile, let’s look back with TechJuice at the year of investments.

Governor of the State Bank of Pakistan Tariq Bajwa said Tuesday that his country expects more financial technology from China to help develop digital financial service in Pakistan.

The governor made the remarks during a launching ceremony of the country's first blockchain technology backed home remittances service. "This puts Pakistan on the map of very few in the world that have launched international remittance using blockchain technology," he added.

The service aims to promote and encourage the use of formal channels for remittances, with all existing incentives offered by the State Bank of Pakistan for promotion of international remittance through mobile wallet being applicable for this service.

Bajwa said cooperation between Pakistan and China has gone beyond infrastructure construction and reached financial technology areas, adding that the new remittances service will bring a breakthrough to Pakistan's financial services sector and contribute to the country's financial digitalization.

For his part, Chairman and CEO of Ant Financial Eric Jing said on the occasion that "the new remittance service is one of the examples of how emerging technologies can help countries meet their digital and financial inclusion goals."

He told Xinhua that through the blockchain technology backed remittances service, his company is making efforts to offer inclusive financial services to more Pakistani people to contribute to sustainable economic development in Pakistan.

He said Ant Financial also pays attention to seeking local partners to develop joint ventures in Pakistan in efforts to make joint development with local partners through the new technologies.

In China, WeChat—a mash-up of WhatsApp, Facebook, Instagram, Yelp, Paypal, Twitter, Uber, Kindle, and more—has become an indispensable part of everyday life for people. The super app provides a long list of services from booking cabs to ordering food delivery to playing games to transferring money, keeping users locked in its ecosystem.

But the creator of India’s popular instant messaging app, Hike, believes this is no China.

Until now, Hike has housed messaging, news updates, digital payments, and cab bookings all under one app-roof. But on Jan. 10, it announced plans to unbundle in 2019.

“In our business the user experience is key and the value isn’t just in the number of users but how engaged they are on our platforms,” said founder and CEO Kavin Bharti Mittal. “Unbundling Hike into multiple apps focused on doing one thing allows us more room in the pixels to deliver much more around one problem.”

Social features like messaging, and content where snackable posts are available, are two segments within the current Hike app that drive high engagement. Users spend upwards of 30 minutes daily in each. Going forward, Hike’s 100 million users will be able to choose between continuing to use the current Hike app or migrating to the specific new apps as they branch off.

Experts think the decision is apt. “India is still in the formative stages when it comes to getting users acquainted to being app-dependent,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “Super apps are for more evolved users who have already gone through the learning curve. Hence they do way better in Japan and China, where penetration of smartphones and mobile internet is way better.” In fact, WeChat itself tanked in India.

The move comes eight months after Hike, which began as an instant messenger in 2012, admitted to spreading itself too thin. In the first place, the company didn’t have a clear path to monetisation; acquisitions and employees were weighing heavy on its costs. As part of cleaning up its act, Hike shuttered its Bengaluru office and laid off nearly 25% of its 350-strong workforce in May last year.

It’s been more than six years since the World Trade Organization ruled that foreign credit card companies should be able to operate freely in China, but it still hasn’t happened.

And it might already be too late for Visa, Mastercard and American Express to compete there. Only one in two people in China has a credit card, according to the People's Bank of China. The average American has 2.6 cards.

In major cities like Shanghai, residents can get by with just two mobile payment apps: Alibaba’s Alipay and Tencent’s WeChat Pay.

Mobile payment has exploded in China. In 2016, Chinese consumers made about $23 trillion (157.55 trillion yuan) worth of transactions through mobile payment platforms, according to the People's Bank of China. That compares to an estimate of just over $100 billion in the U.S. that same year.

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The Lahore studio will be led by Ammar Zaeem, cofounder of Pakistan’s mobile game studio Caramel Tech which already has a team of 50 engineers.
The move is a big investment into Pakistan as a tech hub, and it shows how the game business is expanding around the globe.

Cloudcade:

Founded by Di Huang in 2013, Cloudcade is known for its popular multiplayer game "Shop Heroes" that pits players against each other in a competition to create the best shop they can. If a player can make a better store and perform more tasks than his or her rivals, he or she wins.

The game is available on the Apple iOS App Store, Google Play, Samsung Galaxy Store, Amazon, Kongregate, and Facebook. It is now also supported on the Apple Watch.

43.5% of Indians, the highest percentage in the world, say they do not want to have a neighbor of a different race, according to a Washington Post report based on World's Values Survey.

About Pakistan, the report says that "although the country has a number of factors that coincide with racial intolerance – sectarian violence, its location in the least-tolerant region of the world, low economic and human development indices – only 6.5 percent of Pakistanis objected to a neighbor of a different race. This would appear to suggest Pakistanis are more racially tolerant than even the Germans or the Dutch".

Housing Discrimination:

It appears that there is a small but militant minority in Pakistan that is highly intolerant, but the vast majority of people are tolerant. My own experience as a former Karachi-ite is that there is little or no race or religion based housing segregation, the kind that is rampant in India where Muslims are not welcome in most Hindu-dominated neigh…

Pakistan's human development ranking plunged to 150 this year, down from 149 last year. It is worse than Bangladesh at 136, India at 130 and Nepal at 149. The decade of democracy under Pakistan People's Party and Pakistan Muslim League (Nawaz) has produced the slowest annual growth rate in the last 30 years. The fastest growth in Pakistan human development was seen in 2000-2010, a decade dominated by President Musharraf's rule, according to the latest Human Development Report 2018.

Human Development in Pakistan:

UNDP’s Human Development Index (HDI) represents human progress in one indicator that combines information on people’s health, education and income.

Pakistan saw average annual HDI (Human Development Index) growth rate of 1.08% in 1990-2000, 1.57% in 2000-2010 and 0.95% in 2010-2017, according to Human Development Indices and Indicators 2018 Statistical Update. The fastest growth in Pakistan human development was seen in 2000-2010, a decade dominated by President M…

I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
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